The Budget Fight, the Cable Landings, and Norfolk's One Data Center

We're publishing this session's notes the same day they were gathered — March 12, 2026 — because the most important story is happening right now. The Virginia budget deadline is Saturday. The fight over the data center tax exemption is unresolved as of this afternoon. A Hampton Roads senator is at the center of it.

We'll also cover what this session turned up about the actual infrastructure landscape in Hampton Roads — which is more specific and more interesting than our Session 1 summary suggested — and correct one number we got wrong.

Correction first. In Session 1 we wrote that the Virginia data center tax exemption cost the state "approximately $1 billion in a single year" in fiscal year 2024. That understated the figure. The FY2024 figure was approximately $1B; FY2025 — the most recent completed fiscal year — was $1.6 billion. The industry purchased $33.2 billion in tax-free equipment in that single fiscal year. We've updated the landing page. The analysis holds; the number is larger than we said.

What's Happening Right Now in Richmond

Here is where the two sides stand, based on reporting through March 12:

The Senate passed a budget that phases out the DCRSUT exemption effective January 1, 2027, recovering an estimated $1.1 billion over the two-year budget cycle. The vote was bipartisan: 21 Democrats and 7 Republicans. Senate Finance Chair Louise Lucas — senator from Portsmouth, Hampton Roads — has said publicly she will not send a budget to the governor without this provision. On social media she wrote: "Strong as battleship steel, I will fight for affordability for the people." She has not wavered.

The House passed a budget that preserves the exemption through 2035 but attaches clean energy and energy efficiency requirements via HB 897, sponsored by Del. Rip Sullivan of Fairfax. House Speaker Don Scott — from Portsmouth — has emphasized job creation and described the fight as normal budget-season negotiation.

Governor Spanberger has said data centers should "pay their fair share" and has said she won't pull back on existing contracts. She suggested energy consumption taxes as a possible path. Conferee Sen. Creigh Deeds said bluntly that a consumption tax "cannot approximate the revenue given up through the sales tax exemption" and that the industry itself proposed it — which is worth knowing. As of Wednesday she told reporters conversations are "ongoing" and that both chambers agree on "so much" outside of this issue.

The companion bill SB 619 — which would have required data centers over 90 megawatts to get State Corporation Commission approval before operating — passed the Senate but the House killed the companion bill. So the regulatory mechanism died while the budget fight continues.

What this means for our project: The outcome of this fight will define the policy environment for any community-ownership proposal in Virginia. If the exemption ends, the competitive calculus for private developers shifts — and the argument for public alternatives strengthens. If it continues with clean energy conditions, that's a different landscape. We'll update when the outcome is known; it may require a special session and could extend into April's reconvened session.

The Hampton Roads Data Center Landscape: More Specific Than We Described

Session 1 described Hampton Roads as having "at least four data centers" in Virginia Beach. That's accurate but incomplete. The more precise picture is that Hampton Roads has two distinct data center geographies, driven by entirely different logics.

Virginia Beach: The Cable Hub

Virginia Beach's Corporate Landing Business Park — a 325-acre, Dominion-certified data center park on the oceanfront side of the city — is not a general data center cluster. It's a cable landing complex. Three subsea fiber cables terminate here:

MAREA (Spain; Facebook, Microsoft, Telxius; opened May 2018). BRUSA (Brazil and Puerto Rico; opened August 2018). Dunant (France; Google; opened January 2021). A fourth landing capacity is available at the Camp Pendleton area. Globalinx has permits for an additional diverse cable landing site in the Sandbridge area.

The facilities at Corporate Landing are purpose-built around these landings: Telxius Cable Landing Station (the anchor: 5 MW, 125,750 sq ft). Globalinx Data Centers (150,000 sq ft campus, carrier-neutral, broke ground on additional subsea cable infrastructure in February 2025). ACA International (130,000 sq ft, cable landing station). PointOne ($80M, two 31,000 sq ft facilities, cable landing stations).

Virginia Beach also reduced its tax rate on computer equipment to $0.40 per $100 of assessed value — matching Henrico County's reduced rate — specifically to attract these facilities. Corporate Landing was the direct target of that decision.

This cluster connects Virginia Beach to a larger internet exchange corridor: subsea cables terminate at Virginia Beach, fiber runs up I-64 to Richmond, where QTS Realty Trust operates a 1.3-million-square-foot facility (the "Richmond NAP") that serves as the terrestrial exchange point. The regional boosterism around this — the "I-64 Innovation Corridor," the "Global Internet Hub" framing in RVA757 Connects materials — is entirely about this cable infrastructure. Hampton Roads' relevance to the data center industry right now is primarily as a subsea landing point, not as a compute hub.

Norfolk: One Small Edge Facility

0.75 MW is a very small facility. For context: the Chesapeake proposal that was rejected last year would have been roughly 50 MW. Northern Virginia's Loudoun County has more than 4,900 MW of operational capacity. What Norfolk currently has is an edge caching facility — designed to serve local content delivery with low latency, not to run large-scale compute workloads.

We did not find any pending data center applications or announced projects specifically within Norfolk city limits beyond the existing EdgeConneX facility. This could mean: Norfolk hasn't been targeted yet; or proposals are in early stages not yet requiring public filings; or we haven't found them. We'll search the Norfolk Open Data Portal permit database directly in a future session.

What the Chesapeake Rejection Keeps Telling Us

The June 2025 unanimous rejection of Doug Fuller's Chesapeake proposal — the first large-scale industrial data center proposed in Hampton Roads — deserves more analysis than we gave it in Session 1. A few additional details from the WHRO reporting:

The project was made possible partly by the $24 million Southside Network Authority fiber ring — public money, built to attract tech businesses. The first major proposal that fiber ring enabled was rejected by the community it runs through. That's a specific tension worth documenting: public infrastructure investment that creates private development opportunity, with no requirement that the community that funded the infrastructure gets any stake in the outcome.

Developer Fuller described the site's water supply as "unlimited." A resident publicly called this "a stupid statement." There were no water consumption projections in the permit application. Virginia has no requirement to disclose water consumption projections for data center permits. This is a policy gap, not an accident.

After Chesapeake rejected the proposal, two unnamed cities reportedly signaled interest in hosting it. No regional framework exists to prevent this — each locality negotiates individually with developers who have full information about all the options. The information asymmetry is structural.

Governor Youngkin vetoed a 2025 bipartisan bill that would have required environmental impact studies (noise, water, forests) before data center approvals. He called it "unnecessary red tape." That veto removed one tool localities could have used. Governor Spanberger has not reinstated it.

The Infrastructure That Already Exists — and Who Paid For It

This session clarified something important about the Southside Network Authority fiber ring. It's a $24 million public investment connecting Norfolk, Virginia Beach, Chesapeake, Portsmouth, and Suffolk. It was funded by the five southside cities in partnership — explicitly to attract technology businesses. It ties into the Virginia Beach subsea cable landings, extending the cable infrastructure inland.

This is commons infrastructure. It was built collectively, with public money, to create a shared resource that any locality or business can use. The question the Mithlond framework asks: what claim does that public investment create? If a data center operator uses this fiber ring as a key selling point to investors, uses the cable landings it connects to, operates on a grid subsidized by residential ratepayers, and draws water from public supplies — what does the public get in return beyond construction jobs and property tax revenue?

That's not a rhetorical question. The Chesapeake rejection shows that communities are starting to ask it directly. What we don't yet have is a quantified answer — what would an equitable return actually look like, expressed in dollars or governance terms?

A National Context That Matters

The Virginia fight isn't isolated. As of early 2026, at least 300 data center bills have been filed across 30+ states. The pattern: states that offered large incentives are now discovering the costs exceeded projections by orders of magnitude and are pushing back. Georgia's legislature passed a two-year pause; Gov. Kemp vetoed it in 2024. Arizona wants full repeal. Minnesota has already moved to a fee-based model. Michigan has 19 communities with development moratoriums.

The Virginia fight is the highest-stakes version because Virginia has the most to lose or gain — it hosts 35% of global hyperscale capacity. But the direction of travel nationally is clear: the consensus that gave data centers essentially free infrastructure is cracking. The question is what replaces it.

What We're Doing Next

Four concrete research tasks for Session 3, in order:

One: Query the Norfolk Open Data Portal permit database for data center proxy indicators — high-amperage electrical, UPS systems, industrial cooling. This is findable; it's just a data task.

Two: Map the existing EdgeConneX Norfolk facility and the Virginia Beach Corporate Landing cluster against current FEMA flood zone maps and the VIMS 2050 sea level projections. At 5.38mm/year subsidence, Corporate Landing's long-term risk profile is not trivial.

Three: Track the Virginia budget outcome. Special session likely. We'll cover what was decided and what it means for a community ownership proposal.

Four: Research Virginia legal structures for municipal compute ownership. We keep saying this is possible. We need the actual legal basis — port authority statute, municipal broadband law, utility district enabling legislation.

We also want to reach Tim Cywinski at Sierra Club Virginia. He's been present at the community fights and may know about Norfolk-specific organizing we haven't found.